Tax: MD Tax Hike Will Cost Jobs

Premium Cigar Group Girds for Maryland Tax Increase Battle
Annapolis, Maryland December 15, 2011 – The International Premium Cigar & Pipe Retailers Association is getting ready for another battle in 2012 with tobacco prohibitionists who say they will be pushing the Maryland General Assembly to increase taxes on cigars and other tobacco products besides cigarettes.
The IPCPR represents several thousand neighborhood premium cigar stores – mostly family-run, mom-and-pop operations – and the manufacturers and distributors of the hand-made premium cigars, pipes and related accoutrements they sell.
“Maryland voters are sick of increased taxes disguised to obscure government over-spending and they are tired of being told what to do and how to behave. We must stand against higher taxes, bigger and more wasteful government, and the infantilization of America by the ‘people who think they know better’,” said Bill Spann, CEO of the IPCPR.
“There is a fundamental right in this country for the small businessmen and women we represent to sell a legal product at a fair profit without undue government interference. There is a similar fundamental right for American citizens of legal age to make an informed, conscious choice to enjoy these fine, artisan products,” he said.
Spann said the prohibitionists pushing for the tax increase are basing their case on what he called a misguided effort to prevent underage smoking.
“First, youth aren’t able to afford the premium $6-to-$30 cigars and premium pipe tobaccos that our members only sell to adults. And second, as an association, we have strict policies against underage product sales. IPCPR supports any effort to keep premium cigars and pipe tobacco out of the hands of underage youth, and the way to accomplish that is to enforce the many laws already on the books against underage smoking,” he said.
In addition to the businesses and jobs that Spann says would be at stake with any tobacco tax increase, his association maintains that funds anticipated to be raised by such tax increases rarely reach their predicted levels, and will simply cost the state jobs, tax revenue and business.
“The Maryland adults who purchase cigars and other tobacco products will simply flee to the surrounding states where prices are lower due to state taxes which are half the Maryland rate. In fact, Pennsylvania’s tax on non-cigarette tobacco products is zero and, in the District of Columbia, premium cigars are tax-exempt,” Spann said.
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Contact: Chris McCalla
706/494-1143

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IPCPR Says Proposed Maryland Tobacco Tax Increase is Anti-Business
Annapolis, Maryland? March 2, 2011– A proposed 500 percent excise tax increase on ‘other tobacco products’ could decimate Maryland’s cigar and pipe tobacco businesses, according to the International Premium Cigar & Pipe Retailers Association.
Maryland House Bill 853 and Senate Bill 654 both propose to increase the excise tax rate on tobacco products other than cigarettes from 15 percent to 90 percent with a $3 cap on cigars.
“When will legislators realize that tax increases like this never produce the revenues predicted and always result in negative consequences like lost jobs and businesses?” asked Chris McCalla, legislative director of the IPCPR. “In a small state like Maryland, tobacco customers can easily cross to another state or make their purchases online and pay little to no state or local taxes.”
According to the Tax Foundation, a nonpartisan educational organization founded in 1937, Maryland was the only state to raise every major tax in 2008 in order to fund new spending programs including doubling of its cigarette tax from $1 to $2 per pack.? The Foundation said the tax increase served to introduce record levels of bootlegged product into the state, hurt local businesses by sending thousands of the state’s smokers to surrounding states to purchase their tobacco products, and generated only half the revenue increase predicted by tax supporters.?
In addition, the Children’s Health Insurance Program Reauthorization Act of 2009 is funded solely by excise taxes on tobacco products. CHIP raised federal taxes on cigarettes to more than $10 per carton and on roll-your-own tobacco from about $1.10 per pound to $24.78 per pound – a 2,253 percent increase.
“Now the Maryland legislature is considering raising excise taxes yet again on other tobacco products from the current 15 percent of the wholesale price to 90 percent,” McCalla said.
McCalla believes the only result that would be sure to take place from such an action is the further destruction of Maryland small businesses, which includes the loss of jobs and state, federal and local tax revenues.
“Premium cigars are highly sensitive to price increases because they are more a choice than a habit.? They are adult products that make ordinary moments special and special moments extraordinary, like a fine wine,” he said.
McCalla urged Maryland smokers and nonsmokers alike to tell their state senators and delegates to vote no on tax increases such as these.
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Contact:?????????
Tony Tortorici
678/493-0313
tony@tortoricipr.com

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Cigarette Tax Burnout

August 11, 2008
Politicians in Annapolis are scratching their heads wondering what happened to all those chain smokers who were supposed to help balance Maryland’s budget. Last year the legislature doubled the cigarette tax to $2 a pack to pay for expanded health-care coverage. Eight months later, cigarette sales have plunged 25% and the state is in fiscal distress again.

A few pols are pretending to be happy that 30 million fewer cigarette packs have been bought in the state so far this year. As House Majority Leader Kumar Barve put it, fewer people smoking is “a good thing.” Yes, except that Maryland may be losing retail sales more than smokers. Residents of Maryland’s Washington suburbs can shop in nearby Virginia, where the tax is only 30 cents a pack, and save at least $15 per carton.

The Maryland pols are so afraid this is true that they’ve made it a crime for residents to carry two packs of cigarettes that weren’t purchased in the state. In other words, the state says it’s legal to smoke, so long as you use cigarettes that the government can tax and thus become a financial partner in your bad habit. But if you dare to buy smokes across state lines, you can be fined.

Maryland is only the latest state to prove the folly of trying to finance government with a tax on a shrinking pool of smokers. In New York City and State, tobacco taxes have been raised so many times that the retail cost can exceed $9 a pack — about double the national average. Few budget-savvy smokers in the Big Apple pay that tax. Patrick Fleenor, an expert on tobacco taxes at the Tax Foundation, estimates that there is “now a 75% gap between cigarette sales in the city and cigarette consumption.” In other words, three out of four cigarettes are bought elsewhere or are contraband. Out-of-state purchases, tax-free Internet sales and a cigarette black market are booming.

In New Jersey, about 40% of the Marlboros and Virginia Slims that are lit up escape the $2.57-a-pack tax. In Washington State, evasion was so rampant that the legislature decided in 2005 to lower the 75% tax on cigars and other tobacco products as a way to raise revenue and help state retailers.

Members of Congress, please take note. Democrats are planning one more pre-election go at a $35 billion children’s health program expansion (S-chip) funded by a 61-cent per pack tobacco tax increase. They justify the new levy as a “sin tax.” OK, but if Americans don’t start sinning a whole lot more, states and Uncle Sam are going to go broke.

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Study Says Cigarette Tax Hike Will Cost Jobs, Punish Small Business and Ultimately Cost the State an Estimated $86.8 Million in Lost Tax Revenue